Harambee Technology Pty Ltd is an ICT company that operates in many economic sectors. It has...

 

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Harambee Technology Pty Ltd is an ICT company that operates in many economic sectors. It has identified an opportunity to provide an integrated system, Enterprise Resource Planning (ERP), that will provide efficient and value-driven solutions to small manufacturing companies. They plan to provide an internet-based enterprise management system that will save time at various levels of small heavy production manufacturers, namely strategic, managerial, and operational. It will achieve efficiency and value by automating; interfacing; monitoring key information and performance indicators; and documenting them into one-page reports. They expect to make savings according to the table below. - - Levels Strategic Management Operational Core services Own IT support Other personnel Hours saved per month per each person 18 60 20 50 10 Average number of people 3 6 25 2 3 Average cost R/hour each person 450 350 220 300 320 Given the following information, provide the value of this project. • The ERP will cost R1.260 million per year on average for internal users of the small companies for the project duration. This cost includes cloud hosting, licensing fee, customisation, testing and training. • Harambe IT support services is excluded from the ERP cost above and will be made up of two personnel at an estimated 25 hours per month per person. The all-inclusive personnel rate is about R650/hour. • All personnel costs will increase by 3% per year. • Project life: 3 years The project cost of capital is estimated to be 10%. Ignore depreciations and taxes. Harambee Technology Pty Ltd is an ICT company that operates in many economic sectors. It has identified an opportunity to provide an integrated system, Enterprise Resource Planning (ERP), that will provide efficient and value-driven solutions to small manufacturing companies. They plan to provide an internet-based enterprise management system that will save time at various levels of small heavy production manufacturers, namely strategic, managerial, and operational. It will achieve efficiency and value by automating; interfacing; monitoring key information and performance indicators; and documenting them into one-page reports. They expect to make savings according to the table below. - - Levels Strategic Management Operational Core services Own IT support Other personnel Hours saved per month per each person 18 60 20 50 10 Average number of people 3 6 25 2 3 Average cost R/hour each person 450 350 220 300 320 Given the following information, provide the value of this project. • The ERP will cost R1.260 million per year on average for internal users of the small companies for the project duration. This cost includes cloud hosting, licensing fee, customisation, testing and training. • Harambe IT support services is excluded from the ERP cost above and will be made up of two personnel at an estimated 25 hours per month per person. The all-inclusive personnel rate is about R650/hour. • All personnel costs will increase by 3% per year. • Project life: 3 years The project cost of capital is estimated to be 10%. Ignore depreciations and taxes.

Answer rating: 100% (QA)

To calculate the value of this project we need to calculate the net present value NPV of the projects cash flows over its threeyear life Well consider ... View the full answer